I’ve been using travel credit cards since 2008. I haven’t always used them like I should or taken advantage of a lot of “hacks” until recently. There is always room for improvement. Currently, I have 5 travel credit cards.
Delta Skymiles Gold Amex (oldest)
Southwest Premier Chase
Southwest Business Chase
Capital One Venture (sadly I forgot about this one)
Besides the lucrative sign-up offers. Here are the pros and cons of travel credit cards that I have learned over the years.
Pros of Travel Credit Cards
- Presale for events and concerts. Having every card except Discover has allowed me to take part in pre-sales which are normally a few days before tickets go on sale. Some good ones I have snagged due to the fact are Jay-Z /Justin Timberlake Legends of the Summer, Beyonce and Jay-Z On the Run Tour and Janet Jackson’s imaginary tour to name a few.
- Offers-There are so many offers available to cardholders. They vary per month and per credit card. Mostly based on spending money on a certain product, you can receive cash back. Currently, there are 78 offers in when I log into AMEX. I want to do better and pay attention to relevant offers.
- Standard Offers
- Travel Insurance-When you purchase flights and hotel on the card. You are eligible for reimbursement in the event that something happens to you. Read the fine print because each is different. Most of the time it only extends to the cardholder. If you purchase a flight for others they are not covered.
- Rental Car Insurance-I’ve never purchased the additional insurance for rental cars as all of them cover rental insurance.
- Extended Warranty-Some credit cards offer extended warranty on products you buy. Compare this with the extended warranty they try to sell you in Best Buy etc.
- Purchase Protection-In the event you are unhappy with the item and you don’t have success with working out things with the merchant. You can initiate a claim with the credit card issuer.
*All of the above apply based on which card you used to make the transaction. This is where you should be strategic with purchasing certain items based on policy/card.
- Discounts on travel. Depending on the related company I receive discounts on things like in-flight purchases or discounts on hotels.
- No foreign transaction fees.This is really important if you travel a lot. I like the freedom to use credit cards abroad for any issue post-transaction, purchasing via credit card allows me to dispute. Also, less cash to have to worry about to convert.
Cons of Travel Credit Cards
- No matter how good your credit is, these cards come with a high APR. It’s best to pay the full balance off by due date. Be smart about your purchases.
- Annual fees- Each card can have a separate annual fee that doesn’t count toward any spend for sign up bonuses. Currently all cards I have charge $99 a year. I will need to evaluate which ones I’m going to keep. Southwest cards give 6000 points every year on the anniversary so it’s kind of a trade off because to purchase 6,000 points cost $165.00.
- Credit Score- Requesting multiple travel cards, of course, can have a negative effect on your credit score. If you have multiple inquires this can affect your score. Also, it’s important to be aware of the merchants that do hard pulls for cards even when you are rejected. For example, each chase card I opened was a hard pull even though I’ve been with Chase over 10 years. Also, balance transfers count as a hard hit. On the flip side, Amex doesn’t initiate a hard pull if you are rejected and already a current member. It takes 2 years for an inquiry to fall off your report.
- Addiction- If you aren’t too careful you could start to become addicted to the sign-up bonuses.
- Penalties-Not only do you risk your APR increasing after late payments, some credit cards will not award the points earned during the month if you are late. Pay attention to all the due dates, use the mint app or sign up for text alerts, so you are not late!
All in all travel reward credit cards have done me well. I’ve taken a lot of domestic free trips and provided discounted or free airfare for family and friends. My goal is to hold out for an international trip and master the hotel offers starting with my SPG Amex. One hard lesson I learned is regarding paying off the full balance after meeting the minimum spend.
Not all credit is bad. It is important to only sign up if you can make the sign-up bonus using methods such as paying for bills or a high ticket item for a trusted family member. Something that you know you can pay back right away! Otherwise, you get into trouble and run the risk of getting into unnecessary debt. Ideally, you want to pay it back in the same billing cycle. I’ve touched on a few of the pros and cons of travel rewards credit cards, be sure to be diligent and read all the fine print before making a decision.
What are your favorite travel rewards cards and what tips do you have for those who are considering them? Comment below!
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